Bitcoin millionaires ‘drop like flies’ as FTX fallout shakes crypto market

Bitcoin tumbled more than 54 per cent in 2022

The number of bitcoin millionaires has plunged and scammers have filled their boots in the past year as the market is gripped by a ‘crypto winter’ brought on by soaring inflation and a string of high profile bankruptcies.

Nearly £1.15tn ($1.4tn) was wiped from the value of the market in 2022 as soaring inflation and rate hikes sent investors scrambling for steadier ground. The sector was dealt a fresh blow in November when Sam Bankman-Fried’s exchange FTX imploded amid allegations of fraud and misuse of customer funds.

Bitcoin, the most valuable crypto currency, plunged more than 54 per cent across the year and is currently trading at £14,168 $ (17,249) – down from over £30,000 at the beginning of the year and 75 per cent down from an all-time high in 2021.

New blockchain data analysed by CoinJournal has now revealed the amount of crypto millionaires – those with over $1m (£820k) worth of value in their wallets – fell by around 73 per cent from 90,000 to 24,000 in the period.

The data points to the scale of the carnage wreaked on retail investors with cash tied up in crypto. Analysts at CoinJournal said millionaires had “dropped like flies.”

“The on-chain data sums up what is glaringly obvious from looking at a Bitcoin price chart – that the party is over and investors are no longer dreaming of retirement off their Bitcoin holdings, in the near future at least,” said CoinJournal analyst Dan Ashmore.

“Nearly three-quarters of Bitcoin millionaires losing that status is perhaps the best piece of data of all to summarise how ugly 2022 was for investors.”

The statistics came as separate data from the firm revealed that scams had surged in the past 12 months as fraudsters picked off investors amid the downturn.

The number of breaches and hacks jumped over 27 per cent to 120 – up from 94 the previous, year according to on-chain data analysed by CoinJournal. Total value of the scams came in at £1.87bn, down from £4.37bn the year before due to the sharp slide in the market/

So-called ‘bridges’ between blockchain were the target of some of the years’ most costly, with Wormhole suffering a $320m attack in February, while the Ronin Network was drained of over $600m.

Crypto investors may not see respite in the year ahead

Writes Charlie Conchie

It’s hard not to think of the implosion of Sam Bankman-Fried’s exchange FTX as the defining moment in the crypto market last year. The sheer scale of the 30-year-old former billionaire’s fall from grace and the subsequent revelations of corporate mismanagement will mark it out as one of the greatest business scandals in history.

But the eye-catching collapse can almost shroud the fact that investors had already seen billions of dollars wiped from their wealth in the 10 months prior, as soaring inflation and sharp rate hikes plunged the market into a deep ‘crypto winter’.

And investors could now face grimmer times ahead, with analysts bandying round gloomy predictions that could point to extreme pain to come.

In a research note last month, analysts at Standard Chartered said flagship currency bitcoin could tumble as low as $5,000 next year as investors flee digital assets to take shelter in Gold.

Veteran investor Mark Mobius, who was not far off the mark with his 2022 predictions, predicted the flagship currency would fall to $10,000, in comments shared with CNBC.

The predictions will not make pleasant reading for speculative investors who, just over a year ago, may have had half an eye on crypto-funded retirement. Recessions around the world look lengthy and likely this year and sadly, many investors may be left lamenting their hopeful decision to hold.

Traders may be forgiven for seeking some comfort in the predictions of former bitcoin billionaire Tim Draper, who says bitcoin will rally `1,400 per cent to reach $250,000. Dare to dream.

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